Dollar Strengthening

By: Seat Earnings

FM Nirmala Sitharaman says Indian Rupee is weakening because the Dollar is strengthening. 

Finance Minister Nirmala Sitharaman has said that the rupee has not weakened but it is the dollar that has strengthened, as she defended the 8 per cent slide in the value of Indian currency against the greenback this year. 

Speaking to reporters after attending the annual meetings of the International Monetary Fund (IMF) and the World Bank, she asserted that the fundamentals of the Indian economy were strong and that inflation was low compared to other parts of the world. 

"First of all I would look at it as not rupee sliding, I would look at it as dollar strengthening, dollar strengthening incessantly," she said in reply to a question on weakening rupee. All other currencies around the world are performing against a strengthening dollar, she said.

The rupee settled at 82.35 against the US dollar on Friday, having touched another record low of 82.68 on Monday after which the Reserve Bank of India (RBI) is likely to have intervened. Some analysts say the central bank may have spent nearly USD 100 billion in the past year to defend the rupee. 

India's forex reserves stood at USD 532.87 billion in the week through October 7, a far cry from USD 642.45 billion seen a year back. The RBI as well as Sitharaman have in the past attributed the decline in the forex reserves to valuation changes arising from appreciating US dollar. 

India's consumer price index (CPI) inflation in September rose to a five-month high of 7.41 per cent from 7 per cent recorded in the previous month, with the print remaining well above the upper tolerance level of RBI's inflation targeting framework for the ninth consecutive month. 

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